BA warms to idea of Alitalia alliance
By Kevin Done Aerospace Correspondent
nov 7 2008 15:05
Willie Walsh, British Airways' chief executive, on Friday expressed a strong interest in forming an alliance with a restructured Alitalia, as the UK flag carrier sought to catch up with the consolidation moves already made by its bigger European rivals Air France-KLM and Germany's Lufthansa.
The comments came as BA said first-half profits had dropped, under pressure from the surge in fuel costs and falling traffic volumes, and that the group would cancel its dividend for the six months.
"We believe we have made a very credible and potentially exciting proposition for the new company," Mr Walsh said.
He said the offer was different to approaches made by Air France-KLM and Lufthansa to CAI, the Italian consortium that is in the process of rescuing Alitalia and merging it with Air One, its smaller Italian rival.
He said he was "very pleased with the direct discussions" he had held recently with Rocco Sabelli, the turnround specialist and designated chief executive of the future restructured Italian airline.
Mr Walsh said BA was not interested in investing in an equity stake in the Italian carrier.
"They have a consortium with sufficient capital, they are not looking for capital," Mr Walsh said. Italy was an important market and Alitalia would be a very different company after the "comprehensive restructuring" and "expected turnround".
In contrast to BA, Air France-KLM has made clear it is willing to take a stake of about 20 per cent in the rescue consortium.
Europe's leading carrier by turnover is regarded as the front runner in the contest as the two groups are already fellow members of the same global airline alliance, SkyTeam, and they already have close commercial links.
Separately, BA has been in talks since July with Iberia, the Spanish flag carrier, on an all-share merger of the two groups to form Europe's third-largest airline behind Air France-KLM and Lufthansa.
BA said it anticipated the talks with Iberia would "take several months to conclude".
In spite of the 91.6 per cent fall in pre-tax profits in the six months to the end of September from record profits a year ago and a 9.2 per cent fall year-on-year in premium traffic in October, the BA share price rallied strongly, closing up 11.88 per cent at 146p.
The results were better than feared by the market. BA also raised its forecast slightly for the full year.
It said it was "focused on delivering a small operating profit" for the 12 months to the end of March, replacing previous guidance that it was targeting break even.
The Financial Times
la favola continua........